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Optimal hedging strategy devised by investment bank amidst US debt ceiling crisis


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Investment bank RBC Capital Markets has identified the best hedging instrument in light of growing concerns about the US debt ceiling crisis and its implications for the global economy.

And the RBC Capital Markets institute said that growing fears will benefit gold as investors prepare for possible chaos in the financial markets.

“Intense talks have paved the way for a near-term move in gold that is within walking distance of a record high,” strategist Christopher Looney was quoted as saying by Bloomberg.

“Even assuming a final agreement is reached, we will not ignore the potential heightened financial anxiety as the deadline approaches and gold appears to be the best hedge in the near term,” he added.

Earlier this week, US President Joe Biden warned that a US default would create difficulties and problems that would affect all parts of the world.

In January last year, the US Treasury notified Congress that it was beginning to apply “extraordinary measures” as a result of raising the debt ceiling to $31.381 trillion.

And US Treasury Secretary Janet Yellen has warned that the government will not be able to continue to meet all of its obligations by June 1, 2023, unless a decision is made on the national debt ceiling.

Source: RT + Bloomberg

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